Like Handing Out Speeding Tickets At The Indy 500: The Attack Against Francesca Gino
When I started out on Wall Street 18 years ago, my only competitive advantage was that I didn’t know what I was doing. I never earned an MBA, I never worked at an investment bank, I worked for a startup full of punks and misfits who weren’t properly trained. But we were scrappy, curious, and driven. So, we invented our own models to analyze the market and were able to predict things that Wall Street never saw coming, such as:
The 2008 financial crisis
The displacement of Detroit car manufacturers by Japanese OEMs
The disruption of big box retail by e-commerce
Then we got acquired and I was pulled into the epicenter of big finance where everyone had an MBA. They all made the same mistakes at the same time because they did their jobs in the same way. Every powerpoint deck and excel sheet rolled off the same Ivy League MBA conveyor belt.
After I left Wall Street in 2015 I prayed that someone in an elite MBA program would convey the value of the misfits and Punks who read the markets differently than everyone else. And in 2018, my prayer was answered with the book “Rebel Talent” by Harvard Business School professor Francesca Gino. My book “This MIght Get Me FIred” came out around the same time and we became friends as we spoke at events together.
Francesca basically got fired from Harvard this past summer for allegedly mishandling data. She then sued Harvard in a $25 million defamation lawsuit, among other claims. And last week Harvard unsealed their confidential report, making it public.
The case against Francesca Gino is bullshit, and I say that not just because she’s my friend. I say it because if the attack against her prevails it will diminish and discredit the value of an elite MBA.
Here’s why:
Rock-solid data can create tools (and people) that are useless in real life. In real life, there’s no such thing as a Dutch Auction, a framework for structuring an IPO that is a staple of every MBA curriculum. There’s also no such thing as a discounted cashflow model, a framework for determining the value of a company. Yes, these tools exist and people in the business world use them. But as soon as you complete your Harvard MBA the utility of these tools will be beaten out of you by something called real life. A good banker leading an IPO must be able to reconcile an Elon Musk-sized ego with an old, jaded fund manager who needs to ensure that all the school teachers in Michigan can retire on time. The people who have to live with the consequences of their investment decisions have to reconcile their excel models with a world in which wars break out, corporate cultures clash, business practices get banned, Elizabeth Holmes commits fraud, the market goes crazy over bitcoin, #metoo topples executive leadership teams, and game show hosts become president. In real life, markets are emotional and temperamental. There’s false security in believing that a peer-reviewed academic article with no data errors is useful in a real world which is much messier than a spreadsheet. Too many MBAs churn out graduates who are over-confident that their training works in the real world.
Hate the game not the player - The idea that the benchmark of effectiveness for an MBA professor (who also teaches regularly to Executives) is publication in a prestigious peer-reviewed journal is stupid. Because it’s totally divorced from how their students will be evaluated once they enter the business world. Being an effective leader of a business is measured by driving growth, mitigating risk, and using resources in a smart way. That Data Colada (a group of disgruntled professors who act as data malfeasance whistleblowers) is acting as a vigilante police force only exacerbates the misalignment between teacher and student effectiveness.
Hate the game - not the player part 2. - Presidents don’t write their own speeches and professors don’t collect or analyze their own data. They have research assistants who do that. Yes, they need to be vigilant, and exercise smart oversight. But they don’t always do that. Data errors are a feature - not a bug. To leap to a conclusion of intentional malfeasance rather than an honest mistake is crazy.
Professors’ research is discredited all the time and no one cares except now, when its a woman.
Here is a short list of famous academic research that was proven to be inaccurate, and what happened to the professors who made the mistake:
Clayton Christensen, Harvard Business School, The Innovator’s Dilemma
Seagate Technology, Christensen’s primary example of an incumbent disrupted by new technology, remained the largest company in the disk drive industry while all new entrants celebrated as disruptors either failed or were acquired in firesales. Christensen remained a professor at Harvard, was #3 in Thinkers 50, and was cited by Andy Grove and Sergey Brin as the most influential business thinker in the world.
Thomas Picketty, Paris School of Economics, Capital
Piketty’s famous assertion that economic growth exacerbates inequality made errors in his data sets, including transcription errors, incorrect formulas, and questionable adjustments to data. Piketty is now a distinguished Centennial Professor at the London School of Economics, and an international member of the American Philosophical Society.
The real tragedy of the attack against Francesca is that her work is actually useful for navigating real life. Her work is a bold and necessary attempt to analyze the messiness of human behavior in business. People in business are dishonest, rebellious, self-serving, and occasionally ethical and empowered. These human characteristics are the factors that investors should have had a better grasp of before they dumped $60 billion into Adam Neumann’s WeWork, or trusted Elizabeth Holmes, or believed that GE was invincible. Many Harvard MBAs presided over those disasters with complete fluency of peer-reviewed valuation models.
In reality we need more Francesca Ginos in MBA programs - not less.
If you’re in Chicago, do yourself a favor…
Punks & Pinstripes - Chicago, a community of business punks is accepting applications to be one its next 12 members. Apply here before Friday April 5th, if you want what we have.
